Life in today’s world would be inconceivable without the chemical industry because without this sector every industry would be inconceivable. Without the chemical industry a significant part of transport would grind to a halt (every vehicle powered by petrol or diesel), there would be no medicines, the output of the food industry would be reduced significantly, and the plastics industry simply could not exist.
The chemical industry has a huge number of sub-sectors, partly based on the raw materials used (organic and inorganic chemical industry) and partly on finished products.
Structure of the Hungarian chemical industry
In Hungary, the chemical industry comprises all those sub-sectors categorized under statistical codes 23, 24 and 25. Contrary to this, the manufacture of coke and crude oil refining are not included in EU chemical industry statistics.
The economic crisis did not spare the chemical industry, a fact which is apparent from the data for 2009 (production at current prices dropped back by more than HUF 700 billion), but compared to industry as a whole the chemical industry was soon back on a growth path. In 2010 production volume increased by 9.6% at comparable prices against 2009. The capability of the sector to assert prices is good. This is partly due to the fact that demand for products from this sector is constant and increasing. Export opportunities are positive and expanding; this is primarily true for companies with well-established product lines.
Chemical industry production represented 20.1% of total industrial production in 2010.
The performances of different branches of the chemical industry reveal significant variations.
Oil refining, coke manufacture (TEÁOR 19)
The volume of production in this sector rose 2.9% in 2010, within which crude oil refining showed an upturn of 1.5%. Sales increased by 0.6%: exports jumped by 22%, while domestic demand fell by 5.5%.
Manufacture of chemicals, chemical products (TEÁOR 20)
On a year-on-year comparison, the production value of this sector increased by 13.9% in 2010.
This chemical industry sector can be further subdivided into specialist sub-sectors:
industrial gas production
plastic raw materials
cleaning agents, cosmetics industry
other chemical industry products
Plastic raw materials manufacture – reckoned to be the key sector – increased by 11.7% in 2010. The manufacture of cleaning agents dropped, while the manufacture of fertilizers expanded to a greater degree than the average.
Manufacture of pharmaceuticals (TEÁOR 21)
Compared to 2009, in 2010 production increased by 7.6% and pharmaceutical sales by 5.5%.
Manufacture of plastics and rubber products (TEÁOR 22)
In the wake of the economic downturn, in 2010 this sector also registered the beginnings of growth; indeed it became the fastest developing sector of the chemical industry. The volume of foreign sales from the plastics processing industry grew by 13.7% and domestic sales rose by 11.9%. The growth rate in exports of rubber industry products was 29%, while domestic sales rose by more than 18%.
Overall, the sales volume of chemical industry products was 50% - both on foreign markets and in Hungary – in 2010. The key foreign trade partners for the chemicals and chemical products sub-sector, in order of importance, are Germany (17.4%), Russia (8.6%), Poland (8.3%), France (7.6%) and Italy (7.1%).
If we take into account the foreign trade turnover of chemicals and chemical products exported and imported by sectors other than the chemical industry sector, then we reach the following figures: EUR 8.9 billion for the total value of exports in 2010, while the total value of imports was EUR 12.9 billion in the same year.
In terms of categorization, the plastics industry belongs to the chemical industry (chemical industry sub-sectors categorized under statistical codes 24.16 and 25.2 are manufacture of plastic raw materials and manufacture of plastic products).
Plastics were first developed at the beginning of the 20th century, by the middle of the century they were extensively used and today they are rank as an indispensible part of life in virtually every area. The automotive and aircraft industry, computers and telecommunications, sport and leisure activities, the building industry and the packaging industry would all be inconceivable without plastics. At the same time, polymers have played a central role in the development of modern medical science, the food industry and hygiene. In effect there are no objects of whatever form or size – from oxygenators used in heart surgery to boat hulls – that cannot be created out of plastics. Furthermore, they turn out to be far more economical than the manufacturing processes applied for traditional structural materials. As a raw material, plastics account for a total of 4% of global crude oil consumption, so that the use of plastics contributes to significant energy savings and a reduction in CO2 emissions. Plastics are extremely energy efficient materials and their application in, for instance, the insulation of buildings, provides major benefits, as it does in transport through the manufacture of light frame cars, buses, railway carriages and aircraft.
A recent report drafted by “Denkstatt”, an Austrian consultancy firm dealing with sustainable development, indicates that the utilization of plastics results in 5-9 times more carbon dioxide savings than the emissions involved in the manufacture of the materials in the first place. Analysts believe that this ratio can be leveraged to 9-15 times by 2020 thanks to further developments and efficiencies in the manufacture of plastic products.
Despite such widespread use, polymers are still reckoned as a relatively youthful sector of the plastics industry. They are developing at a great pace and are characterized by huge innovation. New products, new processes and applications are appearing all the time, although it is true to say that competition is becoming increasingly intense.
The plastics industry and within this primarily the plastics processing industry are typical background industries, and as such they are extremely sensitive to the general economic situation. A large part of the products that are marketed do not appear in everyday life as stand-alone items but rather as components and elements.
The Hungarian plastics industry
Ignoring a few smaller dips, the growth of the Hungarian plastics industry was unbroken for two decades. The downturn began in the last quarter of 2008, when as a result of the general reduction in consumption as a knock-on effect of the global economic crisis there was a quantitative fall both in the manufacture of plastic raw materials and in plastics processing. Production continued its downward trend in 2009. Compared to 2001, the 2009 production value was up by 70.1%, although it was 22.1% lower than the previous year (2008). However, the plastics industry and machine manufacturing have been characterized by a cautious but steady recovery since the beginning of 2010.
The plastics industry accounts for approximately 6% of Hungary’s total industrial production. Traditionally plastic raw materials manufacture has been the strongest sub-sector of the Hungarian chemical industry, and this position has been strengthened by major investments in the last ten years. The manufacture of plastic products put in a weaker performance in the early 1990s, but stepped onto a growth path from 1993 onwards. Average usage of plastic per capita in Hungary is relatively high: 71 kg/year. This figure can be put into perspective by comparing the 100 kg/year registered in Western Europe, 23 kg/year in Eastern Europe, and an average 55 kg/year in the Central European region.
Manufacture of plastic raw materials
Four major chemical industry corporations (TVK, BorsodChem, Dunastyr, MOL) handle raw materials manufacturing in Hungary. The following table shows the types of plastics manufactured in Hungary and changes in production between 2005 and 2009.
Raw materials production dropped 10% in 2009 compared to the previous year. The domestic production structure does not match the demand, for instance Hungary cannot produce paste PVC or technical plastics.
Total polyethylene imports increased by 6.0% to 107,500 tonnes. Imports of polypropylene also increased, by 5.2%, to reach 88,800 tonnes. PVC imports crept up 4.1% to 41,000 tonnes. Imports of soft PVC granules were 7000 tonnes, 2500 tonnes less than in 2008. The import of normal and impact resistant polystyrene in effect remained static, while there was a continued reduction of 10% to 16,100 tonnes in imports of extruded polystyrene. In total Hungary purchased 55,900 tonnes of polystyrene from abroad, 2.8 % less than a year earlier. The import of commercial polymers in 2009 was higher than the quantity measured in the two previous years.
In effect exports of raw materials fluctuated in proportion to production; there were increases in polyolefin and extruded polystyrene.
In 2009 the quantity of exports of plastic raw materials dropped by 4.7% (compared to the previous year) to reach 1,191,600 tonnes.
Exports of polyethylene increased by 8.4% to 425,400 tonnes, and polypropylene also upped its export position slightly, to 216,100 tonnes, whereas PVC dropped to a large extent, by 35.9% to record 170,700 tonnes in 2009.
Growth in the exports of polystyrenes reached 4.1%, taking the tonnage to 82,200 tonnes, within which impact resistant types declined by 6.1% to 47,900 tonnes, and extruded versions increased by 22.5% to 34,300 tonnes.
In the other category, the export of isocyanates and PUR raw materials fell back 12.6% to 182,100 tonnes.
Plastics recycling is also an important area: REMAT Zrt. manufactures good quality recycled raw materials from the processing of polyethylene and polypropylene packaging waste.
Hungary has around 500 plastics processing companies including single proprietorship enterprises. Of these, approximately 300 companies process a significant quantity of plastic raw materials, that is, more than 25 million tonnes a year. The following table is based on data collected by the Association of Hungarian Plastics Industry (MMSZ).
The table shows that although 17 major companies account for 45.9% of total plastics processing, and a total of just 71 companies handle nearly 80% of plastics processing, still there are very many small- and medium-size enterprises present (similarly to European practice), even though these numerous companies have to split up the remaining 20% of the market between themselves.
Out of 327 companies, 155 declared that they deliver products to the packaging industry, 97 to the building industry and 82 to the automotive industry.
Areas where plastic products are utilized
The distribution of utilization structure in Hungary is very similar to international practice, that is the packaging industry is all important and the building industry significant. In comparison with 2008, there was growth in the share of packaging, household consumer items and furniture industry. The proportionate share of other categories declined in accordance with the loss-making sectors shaped by the economic downturn.
Diagram 1 Hungarian plastics utilization by area, 2009
The following table shows overall quantities processed in Hungary by product group between 2004 and 2009 (kt)
Plastics processing grew steadily in the period under examination, with foil manufacturing and injection moulded products manufacturing showing the greatest volumes. Foil is primarily used in the packaging industry, building industry and agriculture, while the automotive industry and manufacturers of consumer plastic products (household items, sports, games, furniture etc.) are the largest customers for injection moulded products.
Foreign trade turnover of products made from plastics
The import of plastic products has increased dramatically over the last six years. This trend halted in 2009, with 14.6% less in imported quantity compared to 2008, thus taking it back to the level for 2006.
Imports of the main groups of items developed as follows:
It is evident from the data that there were reductions in the imports of every product category.
The quantity of packaging material and foils remains determining in imports.
The export of plastic products also fell at the end of the six years under investigation. In 2009 the total quantity of plastic products exported declined by 10.6%.
In 2009 there was export growth in only two product groups, sanitary ware and packaging.
Exports of plastic products:
Composite industry in Hungary
The composite industry belongs to the plastics industry but it is still treated separately. Composite structures are multi-phase or compounded structural materials, which are created from reinforced materials and a setting matrix material. Composites fall into the category of most modern structural materials designed for technical purposes, and allow the user to achieve the sort of properties and combinations of properties that the constituent elements could not provide separately.
It is typically a micro-, small- and medium-size enterprise sector; in total, 1200 companies are registered as active in the sector. There are virtually no major companies operating in this area. The advantages that SMEs offer – including flexibility and manufacturing processes that are capable of taking individual requirements into consideration – can be profited from in quite a few areas. These fields – including the manufacture and design of light aircraft, manufacture of yachts, sport boats, masts, canoes and other sports equipment/items – boast many extremely effectively operating and constantly developing companies. The following diagram shows the breakdown by use of composite industrial materials.
Carbon fibre, one of the basic components used in composites, is produced in Hungary by Zoltek Zrt. This company’s production is significant even on a global scale.
Key professional organizations
Hungarian Chemical Industry Association
Association of Hungarian Plastics Industry
Association of the Manufacturers of Reinforced Plastic Materials
Hungarian Cosmetic and Home Care Association
Hungarian Chemical Industry Association - Hungarian chemical industry in 2010
Association of Hungarian Plastics Industry - Hungary’s plastics industry in 2009
A light background industry (2002/4 – Survey) - http://cegvezetes.cegnet.hu/2002/4/egy-konnyu-hatteripar
100 years of the Hungarian chemical industry, the development of the oil industry and petrochemical industry - Centenary Chemical Conference29 May-1 June 2007
HITA sector manager: Négyessy Katalin firstname.lastname@example.org